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Skype’s New Dawn?

We talk about Facebook, twitter, MySpace and Friendster as the big social networks but we keep forgetting one that is far bigger than that: Skype. This from a Bloomberg piece on Skype’s vacillating fortunes:

Skype has soared in popularity since it started in 2003 and has about 548 million users worldwide—more than Facebook, MySpace and Twitter combined.

Pretty much everyone I know is on Skype—more so than Facebook—and their investment in it is greater: They had to figure out how to install software, set up a microphone, a webcam, create an account, and maybe even buy credit. More importantly, they can actually estimate its value to them, by counting the money it’s saved them, if they want.

We all know about eBay’s missteps with Skype over the past few years and the software could definitely do with a total overhaul. But now there are new faces involved—including Marc Andreessen, who knows a thing or two—I foresee huge opportunities ahead.

One is a route they’re clearly going to take: the enterprise. That makes sense, but it also means damping down Skype’s huge social reputation, since companies will tend to think of it as at best a frivolous time waster for its employees, at worst a security threat.

Still, it would make lots of sense to go that route, possibly creating a separate sub brand of Skype that built a wall between the existing network of users and the enterprise one.

But I think there’s a much bigger opportunity out there, one that was talked up back in 2005 but never left the ground. That was leveraging the free connectivity to allow an eco system of services to develop atop of it.

Consulting, translation, education, all that kind of thing.

This never really took off, but I think that may have had more to do with its execution, and the fact that the world wasn’t quite ready. Most people signed up to Skype for the free calls. They weren’t really interested in more than that.

And yet since then Facebook and other social networks have. (Taken off, I mean.) Doing, actually, pretty much the same thing. Setting up an account, adding your buddies to it, and then communicating.

But the potential of that network was never exploited. A few memory-hogging applications and a few desultory ads have been pretty much it.

Maybe now Skype can make the most of this. One is the eco system of services I mentioned, but there are also location-based opportunities, mobile opportunities, video opportunities.

If Skype dovetailed with Facebook, twitter and LinkedIn it could position itself at the heart of social media. After all, it’s probably the only application that most Internet users have installed, loaded and active on their computer. Unlike Facebook et al, Skype is there, right in the moment. It’s the ultimate presence app.

Indeed, it’s much more like an instant Rolodex (remember those?) than all the other networking services we use. If I want to contact someone the first place I check is Skype—if they’re online, what’s the point of contacting them any other way?

In other words, Skype offers a granularity that other social networking tools don’t: Not only is it comfortable with one to all (the status update message), it’s also comfortable with the one to several (add people to a chat or call), it’s also great at instantly connecting one on one. You can even reach people offline via it, if they have call forwarding enable, or you have their SMS details stored.

No other social network offers that.

Of course, Skype has some ways to go to do this. The interface needs a serious rethink: It looks so 2000s.

It needs to add—or reintroduce—lots of features, like individual invisibility (being invisible to some people and not others), to encourage those who either don’t have it running or have themselves permanently invisible, to keep it there in their system tray.

It needs to lower some of its walls to allow interoperability with other chat clients, like Google Talk, and with services like Facebook and LinkedIn. Indeed it should throw open all its doors, so I can look up my friends on the Skype app and communicate with them using any or all of those services. Skype is the app is the network.

Then we might be back to those heady days of 2004-2005 when Skype looked like it was not just going to be the end of ruinous IDD phone monopolies, but that it might herald a new era of networking.

The iPhone Dream

Shocking pricing from New Zealand’s vodafone, the first country to launch the iPhone 3G. A $200 iPhone? More like $2,000-$5,000 after charges.

As ReadWriteWeb points out:

Carrier greed worldwide is probably the major reason why the Mobile Web is struggling to take off.

You can’t blame them for trying to make some money while they still can, because that scraping sound is the rats trying to secure stowage on a sinking ship.

Vodafone NZ Charges “Like a Wounded Bull” For iPhone 3G – ReadWriteWeb

The iPhone Dream

Shocking pricing from New Zealand’s vodafone, the first country to launch the iPhone 3G. A $200 iPhone? More like $2,000-$5,000 after charges.

As ReadWriteWeb points out:

Carrier greed worldwide is probably the major reason why the Mobile Web is struggling to take off.

You can’t blame them for trying to make some money while they still can, because that scraping sound is the rats trying to secure stowage on a sinking ship.

Vodafone NZ Charges “Like a Wounded Bull” For iPhone 3G – ReadWriteWeb

Skype SMS’ Teething Problems

You’ve probably all heard of Skype’s new SMS service, which is very cool. If you have a Skype-Out account, you can send SMS messages to cellphones and, if you register you cellphone number with Skype, the recipients can reply to you on your mobile phone. Great idea. Only problem: It doesn’t work.

Well, it does work, but not always. At least one cellular operator doesn’t seem to pass the messages on. That wouldn’t be a problem, except that Skype says that the message has been delivered, and charges you for it. Teething troubles, I guess, but still a nuisance, if you’re counting your Skype pennies. (This experiment has so far set me back €0,44. Money that has gone forever. Forever.) Other folk are reporting similar problems, although it doesn’t sound widespread.

Skype’s technical people say you should raise a help ticket if this happens to you. The only problem is: How do you know that it doesn’t get through? An interesting conundrum as Skype ventures into new waters. Consider: Cellular SMS supports a service which allows you to receive notification of the arrival of your message; Skype users can tell whether other Skype members are online and available. But now you can send an SMS to someone, unless the pending/delivered/failed notification feature works properly, all those presence/delivery indicators are out the window.

A weird disjuncture, given that Skype is best used for non-local calls. Skype is all about reaching beyond the tyranny of long distance communication costs. And the same is true of Skype SMS, I suspect, especially in those places where SMS is very cheap. Here in Indonesia, for example, cellular SMS to an Indonesian phone costs 250 rupiah, or 3 US cents. A Skype SMS costs 14 US cents. No one is going to send a Skype SMS to someone locally if that kind of price difference exists. So Skype SMS might best work if you want to communicate with someone who is not at their computer, or doesn’t have Skype (or doesn’t have a computer) but doesn’t live in your zone. Not a bad niche. But the problem still remains: If SMS via Skype is really going to kick in, reliability is going to be an issue. Who is going to use the service if they have no way of knowing whether their messages landed?

Something that Skype needs to fix.

Skype’s 100 Million: Where The Hell Are They?

Internet telephony folks Skype today says that it now has 100 million registered users. A press release (free registration required) says that this was achieved in “just two-and-a-half year’s time [sic], and has nearly doubled in size from September 2005 when it had 54 million registered users.” This is truly impressive. But if this is the case, where the hell is everyone?

My Skype currently shows 3,633,607 users online. Admittedly this is during the Asian day, when traffic is not as high as when the Europeans and Americans wake up. But that’s less than 4% of registered users actually online. OK, allowing for people who are ‘away’ (I believe this excludes them from being counted) and for folk who only go online occasionally, and allowing for the vagaries of actually reporting the total number of users online (actually, another 6,000 users have appeared since I started writing this paragraph), I can’t help wondering whether the 100 million figure is a) a wild exaggeration, down to people registering twice, b) people registering and then ditching it or c) the number of users that appears in the Skype program is just not reflecting reality.

No question Skype is big. And good: Everyone I know has it, some of them people who have resisted the Internet age on an almost Luddite scale. But I just wonder where all those tens of millions of people are. What’s the biggest number we’ve seen online? Anyone seen more than 10 million in one go?

Ebay to buy Skype: It’s Official

eBay Inc. has agreed to acquire Luxembourg-based Skype Technologies SA, the global Internet communications company, for approximately $2.6 billion in up-front cash and eBay stock, plus potential performance-based consideration.

Here’s the rest of the release:

The acquisition will strengthen eBay’s global marketplace and payments platform, while opening several new lines of business and creating significant new monetization opportunities for the company. The deal also represents a major opportunity for Skype to advance its leadership in Internet voice communications and offer people worldwide new ways to communicate in a global online era. Skype, eBay and PayPal will create an unparalleled ecommerce and communications engine for buyers and sellers around the world.

“Communications is at the heart of ecommerce and community,” said Meg Whitman, President and Chief Executive Officer of eBay. “By combining the two leading ecommerce franchises, eBay and PayPal, with the leader in Internet voice communications, we will create an extraordinarily powerful environment for business on the Net.”

“Our vision for Skype has always been to build the world’s largest communications business and revolutionize the ease with which people can communicate through the Internet,” said Niklas Zennström, Skype CEO and co-founder. “We can’t think of any better platform to fulfill this vision to become the voice of the Internet than with eBay and PayPal.”

“We’re great admirers of how eBay and PayPal have simplified global ecommerce and payments,” said Janus Friis, Skype co-founder and senior vice president, strategy. “Together we feel we can really change the way that people communicate, shop and do business online.”

Zennström and Friis will remain in their current positions. Zennström will report to eBay CEO Whitman and join eBay’s senior executive team.

Online shopping depends on a number of factors to function well. Communications, like payments and shipping, is a critical part of this process. Skype will streamline and improve communications between buyers and sellers as it is integrated into the eBay marketplace. Buyers will gain an easy way to talk to sellers quickly and get the information they need to buy, and sellers can more easily build relationships with customers and close sales. As a result, Skype can increase the velocity of trade on eBay, especially in categories that require more involved communications such as used cars, business and industrial equipment, and high-end collectibles.

The acquisition also enables eBay and Skype to pursue entirely new lines of business. For example, in addition to eBay’s current transaction-based fees, ecommerce communications could be monetized on a pay-per-call basis through Skype. Pay-per-call communications opens up new categories of ecommerce, especially for those sectors that depend on a lead-generation model such as personal and business services, travel, new cars, and real estate. eBay’s other shopping websites – Shopping.com, Rent.com, Marktplaats.nl and Kijiji – can also benefit from the integration of Skype.

PayPal and Skype also make a powerful combination. For example, a PayPal wallet associated with each Skype account could make it much easier for users to pay for Skype fee-based services, adding to the number of PayPal accounts and increasing payment volume.

In addition, Skype can help expand the eBay and PayPal global footprint by providing buyers and sellers in emerging ecommerce markets, such as China, India, and Russia, with a more personal way to communicate online. And consumers in markets where eBay currently has a limited presence, such as Japan and Scandinavia, can learn about eBay and PayPal through Skype. Skype can also help streamline cross-border trading and communications.

With its rapidly expanding network of users, the Skype business complements the eBay and PayPal platforms. Each business is self-reinforcing, organically bringing greater returns with each new user or transaction. The three services can also reinforce and accelerate the growth of one another, thereby increasing the value of the combined businesses. Working together, they can create an unparalleled engine for ecommerce and communications around the world.

Transaction and Financial Information

eBay will acquire all of the outstanding shares of privately-held Skype for a total up-front consideration of approximately €2.1 billion, or approximately $2.6 billion, which is comprised of $1.3 billion in cash and the value of 32.4 million shares of eBay stock, which are subject to certain restrictions on resale.

The maximum amount potentially payable under the performance-based earn-out is approximately €1.2 billion, or approximately $1.5 billion, and would be payable in cash or eBay stock, at eBay’s discretion, with an expected payment date in 2008 or 2009. Skype shareholders were offered the choice between several consideration options for their shares. Shareholders representing approximately 40% of the Skype shares chose to receive a single payment in cash and eBay stock at the close of the transaction. Shareholders representing the remaining 60% of the Skype shares chose to receive a reduced up-front payment in cash and eBay stock at the close plus potential future earn-out payments which are based on performance-based goals for active users, gross profit and revenue.

The above-mentioned dollar and eBay share amounts are approximate, based on the Euro-Dollar exchange rate and eBay’s stock price as of September 9, 2005. The final value of the stock component of the consideration may vary significantly from this estimate based on the value of eBay stock at closing.

Skype generated approximately $7 million in revenues in 2004, and the company anticipates that it will generate an estimated $60 million in revenues in 2005 and more than $200 million in 2006. For Q4-05, eBay expects the acquisition to be dilutive to pro forma and GAAP earnings per share by $0.01 and $0.04 respectively. For the full year 2006, eBay expects the transaction to be dilutive to pro forma and GAAP earnings per share by $0.04 and $0.12 respectively, with breakeven on a pro forma basis expected in the fourth quarter of 2006. On a long-term basis, eBay expects Skype operating margins could be in the range of 20% to 25%.

The acquisition is subject to various closing conditions and is expected to close in the fourth quarter of 2005.

Was the News Corp Offer for Skype Real?

Was the story that News Corp nearly bought Skype for $3 billion really true? British paper the Independent on Sunday seems to think so:

 According to well-placed sources, Skype entered into talks with News Corp over a potential $3bn sale. This would have made a massive profit for the two founders and their backers – Hotmail investor Howard Hartenbaum and four venture capital firms – which together put just $20m into the business.

However, talks fell apart last month, just before Rupert Murdoch’s son Lachlan quit his father’s empire. Skype would have fitted in well with News Corp’s satellite TV interests, which include controlling minorities in DirecTV in the US and BSkyB in the UK.

This was originally reported a week or so ago by the PBS’ Bob Cringely, but lacked sourcing and was knocked down by several folk, including Techdirt.

Unfortunately The Independent’s sourcing is not much clearer than Cringely’s:

Rupert Murdoch’s News Corporation is understood to have made a bid approach to the fast- growing internet phone group, Skype, which may have valued the two-year-old operation at almost $3bn (£1.7bn).

Talks have broken down and Skype has denied it is for sale. But sources in the telecoms industry say they expect it to be taken over shortly.

Anyway, one potential clue about the sourcing is in the last paragraph:

Bob Cringely, a US technology expert, said: “What’s most interesting about News Corp and Skype isn’t that the deal fell through, but that News Corp even knew Skype was available.”

So, was Bob a well-placed source for this story, or just a commenter?

An Idiot’s Guide To Prepaid GPRS

Further to my earlier post about GPRS traveling woes, I asked Syd Low of AlienCamel to offer his thoughts on the subject. He’s something of an old hand at the game.

For the last two years I’ve gone “on the road” to the Alps. My journey goes through Asia, then Switzerland and finally Austria. In 2004 I had a Treo 600 and this year a Treo 650. I’ve used GPRS with prepaid SIM cards in five countries will almost perfect success to stay in touch with friends and colleagues using IM and Email.

In Europe, I usually look for a mobile shop at the airport or train terminal. Zurich airport is great – all three carriers are there -Swisscom, Sunrise and Vodafone. Just wander in, buy a card and you’re on your way in less than 20 minutes. When you return the following year, you just need to get a recharge card and you’re away in 5 minutes. In Asia and Italy, I found that all carriers have shops in the main street. Venice and Verona for example have Vodafone shops conveniently located among the shops and resellers everywhere. Same deal – quick and fast transactions. In Austria where there’s not much competition, the most convenient place is the post office where you can get A1 prepaid cards. Recharge cards are available at supermarkets.

The Treo 650 auto configures to all of these networks and there’s no need to manually make any setting changes. Just put the sim card in and everything just works. I’ve only had a minor glitch with A1. For a few days I couldn’t get GPRS coverage – not sure if it was my phone or the network high in the Alps.

Life would be a lot simpler if there was a carrier that did global roaming with fair rates, but I think it’ll be a blue moon when that happens. Until then, get yourself a little case to get a sim card for each country.

Thanks, Syd.  Oh and here’s a picture of his SIM-card stash:

Simstash

Skype And The Rise Of a Phenomenon We Can’t Pronounce Properly

I recently noticed an interesting phenomenon: Not everyone agrees on how to pronounce Skype, the Internet telephony service. An American friend calls it ‘Skypy’, a Belgian acquaintance calls it ‘Skypé’, and someone else calls it ‘Skypee’. I even noticed the excellent Skype Journal, when it talks about the video plug in for Skype, Vidpe, says it assumes ‘is the name of the product because it rhymes with Skype ‘. That would make it Skid-pee, would it not?

I always thought it was pronounced Skipe. And indeed, have gently mocked anyone who pronounces it otherwise, citing type, pipe, wipe, tripe, gripe, ripe, etc etc. I’ve called it Skipe in interviews with Skype execs. Hell, even my mother calls it Skipe. Still, I thought I should double check. And here, on Skype Frequently Asked Questions is the answer:

How do you pronounce the word Skype?
Skype rhymes with ripe and type.

So there you are. But that’s not the interesting bit. My theory from this is that the pronunciation thing is a reflection of the fact that Skype is a real break-out product. People who would not usually download products and figure out how to use them are doing so because of the immense savings, and it is this breadth of usage that contributes to the confusion over how to pronounce it.

Usually everyone knows what to call something because it spreads via the media — TV, radio, newspapers — so people are likely to hear the name before they start adopting it. Here people heard about Skype from friends, long before they heard about it from more formal channels, and started using it right then and there. On Factiva Skype got 35 mentions in September 2003 (compared with 529 for Wi-Fi in the same month) and yet the next month, the month of its launch, had been downloaded 90,000 times. Coverage in the mainstream media did not begin to rise until March 2004, by which time it had been downloaded 4 million times. Coverage was still spotty until the last quarter of 2004, reaching a peak of 200 mentions a month by which time it had been downloaded 20 million times. (Compare that coverage to blogging, which was getting more than 2,000 mentions a month by late 2004.) Skype, like ICQ and SMS before it, was hitting the big time because of word-of-mouth, not word-of-media. At least, not the traditional sort.

Skype is officially a revolution because we’re using it before we even know what to call it.

UK WiFi Users Get Free Skype Calls

Skype is moved into wireless telephony by announceing that a deal with UK wireless provider Broadreach, the BBC reports.

People using wireless net hotspots will soon be able to make free phone calls as well as surf the net.

Wireless provider Broadreach and net telephony firm Skype are rolling out a service at 350 hotspots around the UK this week.

Users will need a Skype account – downloadable for free – and they will then be able to make net calls via wi-fi without paying for net access.